Institute also warns of an increasing number of clients not paying their invoices on time as workload expectations fall
Increasing competition from unregistered ‘architectural designers’ is driving down fees for registered architects, RIBA has warned.
Several practices have told the institute that an intensified downward pressure on fees is being partly caused by rivals outside of the profession.
The institute has also flagged an increase in the number of clients which are not paying their invoices on time, threatening cash flow at practices.
The warnings come amid a worsening picture for smaller practices for future workload expectations despite an easing of inflation in recent months.
RIBA’s monthly Future Trends report found practices which employ 10 people or less had dropped to an index figure of -15 in December. Any score below zero indicates practices on average expect workloads to fall in the next three months.
Future workload optimism in three out of the four surveyed sectors also fell, with commercial dropping to -5, the public and community sectors both falling to -9.
RIBA head of economic research and analysis Adrian Malleon said: “We are aware of heightened competition, including from ‘architectural designers’, which continues to intensify the downward pressure on fees, and an increasing number of reports of clients failing to pay invoices on time, threatening practice cash flow.”
He added: “While the Consumer Price Index (CPI) and construction output price inflation are both on a downward trend, this has yet to translate into an uptick in architects’ commissions.
“These results indicate practices expect to reduce workloads and limit recruitment as they head into 2024.
“Practices also continue to report the challenges of still high inflation, high interest rates, elevated project costs, and ongoing planning delays, alongside diminished pipelines of work and low levels of enquiries.
“Some note planning delays being exacerbated by the level of detail required in planning submissions, deterring the progression of potential projects.”
However, while smaller practices reported a gloomy outlook in December, those which employ 11 or more staff were markedly more optimistic.
Future workload expectations for medium and large practices rose by six index points to +30 in December, indicating that these firms expect a growing amount of work in the next three months.
This is despite the average score for the profession as a whole slipping by three points to -9, and all surveyed UK regions posting a negative score except the North of England, which rose by nine points to +5.
The report’s survey of staffing expectations over the next three months also recovered slightly by one point to -2. Four out of five practices expected no staffing changes in December, with 9% expecting to employ more staff and 11% expecting to employ fewer.
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